i. Description of the Chinese Freight Transport Sector
With the opening of the Chinese economy and the move to a modern industrial infrastructure, freight transportation has exploded in the last generation. Turnover volumes of commodities moving within and from China have grown an average of 8.3% per year over the last two decades, nearly quintupling between 1975 and 1995 (Figure 1).
Figure 1
The heterogeneity of the emerging freight transport sector is striking as well. While the fundamental roles of rail and domestic water transport in the freight infrastructure remain relatively unchanged, the appearance of trucks for short-haul transportation and the massive expansion of exports have fundamentally changed the nature of freight transportation in China (Figures 2, 3 and 4).
|
Figure 2 |
Figure 3
|
Figure 4 |
The relative volume of rail transportation is a little over half of what it was twenty years ago, water transportation has increased from one-third to half of overall freight turnover, and road transportation has become a significant component of the overall freight transportation infrastructure.
China’s focus on decentralized production for domestic consumption persisted into the 1980’s, and largely defines the freight transportation system we see today. While the mix of transportation modes is changing, the use of each transportation mode remains remarkably stable. China’s reliance on rail and water as dominant transportation modes is unique compared to other major world economies (Figure 5).
Figure 5
Furthermore, there are significant differences in how each mode is used. Rail and water are the dominant modes for long distance transport (289 km and 1551 km average trip distances, respectively) while highway transportation is limited to local movement (50 km average trip distance) (CDP, 1996). In the US and India, for example, average distances for freight moving by road is in the 250 km/trip range. The basic pattern in China has remained remarkably consistent, although average rail distances have increased somewhat.
Chinese investment in the underlying transportation infrastructure (railroads, roads, canals and harbors) necessary to efficiently move commodities around the country have failed to keep up with growth in the transportation sector. Chinese transportation infrastructure investments were in the range of 1% of GDP well into the 1980’s (World Bank, 1985a).[1] While freight traffic more than quadrupled between 1978 and 1992, total mileage of operating railroads increased about 10%, overall highway mileage increased about 19%, and inland waterway mileage actually declined (CSD, 1996). The quality of existing routes has improved in that time period, but at a much slower pace than the increase in traffic. Transport route density in 1980 per 1000 square km was on-fifth that of India, and one-seventh that of the United States. In terms of population, China’s transportation density was one-third that of India, and one-thirtieth that of the United States (World Bank, 1985b).[2] As a result of under-investment in transportation infrastructure, a variety of bottlenecks in the system are already hampering current growth, and pose a significant threat to China’s future economic expansion.
Figure 6
Rail is one of the dominant freight transportation modes in China, and the one most integrated into China’s recent energy infrastructure. 40% of the freight tonnage moving by rail is coal, and about 70% of China’s coal moves by rail. With a shift away from decentralized self-sufficiency, pressure has increased on the rail infrastructure to move high-quality coal longer distances out of Northern China to Southern manufacturing areas.
Rail freight volumes have grown an average of 5.7% over the last twenty years, resulting in a decreasing relative share of freight transportation. This, combined with existing rail system constraints, makes OECD estimates of sustained growth in rail freight transport in the range of 6.7% over the next 15 years somewhat suspect.
Figure 7
Freight transportation by road is characterized by the use of relatively small trucks (in the range of 5 tons). Many of these trucks operate with empty backhauls, road quality remains poor in much of the country, and the short transport distances mean that a relatively high percentage of time is spent loading and unloading.
In 1980, India was moving as much freight by road as China, while using 30% as many trucks (World Bank 1985b). Again, despite a government mandate to encourage larger, diesel fueled trucks, this pattern has remained remarkably consistent over the last couple of decades.
Road transport has grown dramatically since 1974, and is now roughly comparable to river and canal transportation in terms of freight volume. But highway transport remains a niche transportation mode in China, used primarily for short-haul routes. Chronic under-investment in highway infrastructure, combined with, in the case of road freight, the jamming of existing highway infrastructure due to the explosive increase in passenger travel by road, makes OECD estimates of an 11.8% average annual increase in highway freight transportation over the next 15 years a dubious prospect.
Figure 8
Water transport is an unusually large component of internal freight movement in China. River and canal transport provides commodity transportation from the western interior to the coast. Coastal transport provides a north-south alternative to constrained routes in the interior, over distances similar to the coastal trade in Japan.
River and coastal trade has grown an average of 10.5% between 1975 and 1995. Available data does not distinguish between internal and coastal freight volumes. However, the slow deterioration of the river system over the last three decades, and the tiny percentage of interior shipping channels suitable for larger vessels (about 5% of the total inland waterway system draws more than 2 meters) would indicate that the bulk of growth has been in the coastal trade. Ocean export trade has grown an average of just under 10%, reflecting the vast increase in exports as China enters the world economy.
Figure 9
Air transport of freight has grown incredibly quickly (around 20% per year) in relative terms, but remains an infinitesimal fraction of overall freight volumes in relative terms.
Figure 10
Pipeline transport volumes averaged about 2.6% growth over the last 25 years, but has basically remained flat for over a decade. Future growth in this sector will depend in large part on the decisions China must make in the coming years about whether to rely on increasing gas and petroleum imports.
Because the vast bulk of energy demand in Chinese freight transportation is concentrated in the rail, road and water transportation modes, the remainder of this briefing will focus on these three sectors.
ii.
Chinese Freight
Transport Energy Characteristics
China’s transportation energy demand is very low in both absolute terms, and relative to energy consumption in the country (Priddle, 1996).[3] However, transportation is a major component of the rapid growth in demand for petroleum, with growing significant economic and security issues for China as it moves towards a new role in world energy markets as a significant oil importer. Over a quarter of diesel demand, a third of gasoline demand, and nearly half of kerosene demand can be directly attributed to transportation demand (Table 1).
Table 1: 1994 Transportation Energy[4]
|
|
Units |
Total |
Transportation |
Equipment |
Transportation % |
|
Coal |
10^6 metric ton |
1,285.32 |
23.11 |
12.4 |
2.8% |
|
Coke |
10^6 metric ton |
90.94 |
0.07 |
1.36 |
1.6% |
|
Gasoline |
10^6 metric ton |
26.97 |
9.00 |
0.27 |
34.4% |
|
Kerosene |
10^6 metric ton |
4.52 |
2.00 |
0.01 |
44.4% |
|
Diesel |
10^6 metric ton |
38.03 |
9.98 |
0.18 |
26.7% |
|
Fuel Oil |
10^6 metric ton |
35.95 |
2.28 |
0.18 |
6.8% |
|
Natural
Gas |
10^6 m^3 |
17,342.00 |
130.00 |
137.00 |
1.5% |
|
Electricity |
10^6 kWh |
926,037.00 |
16,404.00 |
8,952.00 |
2.7% |
Estimates of energy
consumption in the freight transportation sub-sector vary significantly among
various available sources. This briefing paper derives its estimates from
bottom-up counts of transport vehicles, mileage and assumed energy intensities.
Given the nature of road transportation in China, one possible effect of this
approach is to underestimate the energy intensity of truck transport.
Table2: Estimated Average Energy Intensity of Chinese Freight Transport
Modes, 1993
|
|
Units |
|
GJ/Unit |
GJ/1000 ton-km |
Rail - Steam |
kg ccoal/1000 ton-km |
13.7 |
0.025 |
0.34 |
|
Rail -
Diesel |
kg diesel/1000 ton-km |
2.4 |
0.045 |
0.11 |
|
Rail -
Electric |
kWh/1000 ton-km |
10.9 |
0.012 |
0.13 |
|
Road -
Gasoline |
kg gasoline/1000 ton-km |
9.6 |
0.051 |
0.49 |
|
Road -
Diesel |
kg diesel/1000 ton-km |
5.7 |
0.045 |
0.26 |
|
Water -
Diesel |
kg diesel/1000 ton-km |
4.5 |
0.045 |
0.20 |
|
Water -
Fuel Oil |
kg fuel oil/1000 ton-km |
4.5 |
0.045 |
0.20 |
From the above energy
intensities, we can estimate overall energy consumption in the freight sector (Table 3)
Table 3: Estimated Freight
Transportation Energy Use, 1993
|
|
Units |
|
GJ/unit |
GJ |
% |
tce[5] |
Rail - Steam |
ton coal |
12,033,953 |
25 |
300,848,828 |
15% |
13,533,461 |
|
Rail -
Diesel |
ton diesel |
7,615,426 |
45 |
342,694,157 |
17% |
15,415,842 |
|
Rail -
Electric |
MWh |
10,191,342 |
12 |
122,296,099 |
6% |
5,501,399 |
|
Road -
Gasoline |
ton gasoline |
17,048,461 |
51 |
872,540,225 |
43% |
39,250,572 |
|
Road -
Diesel |
Ton diesel |
3,294,718 |
45 |
148,262,320 |
7% |
6,669,470 |
|
Water -
Diesel |
ton diesel |
3,433,700 |
45 |
154,516,500 |
8% |
6,950,810 |
|
Water -
Fuel Oil |
ton fuel oil |
2,276,300 |
45 |
102,433,500 |
5% |
4,607,895 |
A graphic representation
of the relative energy consumption of each freight transport mode is shown here
as Figure 11. The breakout of primary fuel sources for freight transportation
energy is shown as Figure 12.
Figure 11
Figure 12
The radical shift from a
coal locomotive dominated transport sector to one dominated by petroleum
products is probably the most striking change in Chinese freight transport
modes over the last two decades. It implies dramatically increasing dependence
on oil imports for China, with significant economic and security implications.
With the end of production of new steam locomotives, China is rapidly reducing the share of coal-fired rail transportation, which made up 80% of the overall fleet fifteen years ago (World Bank, 1985a). The bulk of the rail system are being upgraded with relatively modern technology. The net effect of this change is a significant improvement in the energy intensity and environmental impacts of the rail sector, at the cost of increased demand for petroleum products.
Figure 13
Road transportation in China has traditionally been dominated by gasoline powered trucks. A recent government mandate to shift to larger, more efficient diesel should improve energy intensities, although TSP concentrations will increase in areas where diesels are more common. Freight transportation has traditionally dominated total road traffic, and was still about two-thirds of the vehicles on the road in 1990 (US DOE, 1994)[6]. This can be expected to change dramatically as passenger cars become more prevalent.
Current fuel economies in the Chinese truck fleet is poor compared to state-of the-art diesels in Europe. For example, a Daimler Benz 1217L uses about 19.3 l/1000 ton-km, compared to 1990 Chinese fleet averages of 71 liters/1000 ton-km for the gasoline powered fleet, and 48 liters/1000 ton-km for the diesel powered fleet (LBL, 1997[7] and US DOE, 1994[8]). The best available domestic diesel vehicles are still about 20% less efficient than their foreign counterparts. There is significant potential for improving fuel efficiencies over the long term with improved domestic gasoline and diesel engine production. In addition, fleet changes that increase the ratio of the current diesel fleet of around 20% of mid-sized trucks to something approaching the US ratio of 70% could further improve efficiencies. Higher octane gasoline could improve gas-powered vehicle mileage by around 10% (US DOE, 1994), but widespread distribution of high-octane fuel could take time, especially in light of China’s commitment to phase out leaded gasoline in the near future.
Road quality is poor. Less than 5% of highway mileage in China was paved and rated for speeds over 40 km/hour in 1990, and less than 30% was paved at all. The result is an increase on the order of 30%-40% more fuel consumption on low-grade highways (US DOE, 1994), indicating that many estimates of the energy intensity of road transportation in China may be low. Trucks and cars share the roads with tractors, bicycles and draft animals in most areas.
Interior river transportation is hampered by the gradual deterioration of the river system over the last several decades. Most of the inland waterways in China remain in a natural state, and congestion is a common problem due to lack of freight handling infrastructure (US DOE, 1994).
The Chinese fleet is relatively old, with fuel efficiencies for the ocean-going fleet about 15% below the world fleet average, and inland and coastal efficiencies nearly 30% below the world fleet average.[9] Again, there are significant opportunities for improvement in this sector as the Chinese fleet is upgraded in the coming decades.
iii.
Prospects for the
Freight Transportation Sector
The Chinese government has begun to take the environmental impacts of economic growth seriously in recent years, with investments in environmental mitigation expanding from zero to around 1% of GDP during the 1980’s (Michalski et. al., 1996).[10] However, the rapid expansion of the Chinese economy, combined with secular changes in transport modes towards the automobile, has thus far outstripped initial efforts at environmental mitigation.
China is suffering the effects of chronic under-investment in its transportation infrastructure. Rapid economic growth, particularly in export oriented markets, is being hampered by severe bottlenecks in the transportation infrastructure. These constraints are already costing China about 1% of GDP, with little prospect for relief in the near to medium term (OECD, 1996).[11]
The Organisation for Economic Cooperation and Development (OECD, 1996) Identifies three plausible scenarios for Chna’s near-term future.
In one, growth rates continue in the range of 9% overall, and somewhat higher for export related economic activity. This influx of capital is used to expand and optimize both the transportation and energy infrastructure, reducing the severe bottlenecks in both infrastructure components, and to make a serious down payment on mitigating the extreme environmental challenges China faces. The widening internal disparity between the industrializing Pacific Rim of the country and the largely rural interior is mitigated as infrastructure improvements and economic development diffuse throughout the country.
At a slower rate of growth (4% - 5%), the economy is unable to absorb rising unemployment and put social service systems in place. Investment in infrastructure falls below the levels required to integrate regional economies and effectively improve transportation, energy and environmental systems.
In a third scenario, exports continue at a brisk pace, but China fails to resolve regional disparities in economic growth. Internal political disputes and economic dislocations make national strategies for transportation infrastructure improvements difficult to effectively implement.
China continues to have excellent prospects for increasing export markets, as it moves into increasing production of machinery and technically advanced products for developing world markets. Again, the pace of this transition hinges in large part on China’s ability to deal with transportation constraints.
Coal demand is expected to increase at a rate of around 3% per year to satisfy rising industrial production and demand for electricity (Michalski et. al., 1996). Even with a national strategy of increasing coal washing and minemouth electric energy production, this has serious implications for a rail system that is chronically at capacity in many coal transportation corridors. It is conceivable that transportation bottlenecks could cause internal coal prices to rise significantly above world market prices (Michalski et. al., 1996), with the prospect of China as a net coal importer creating additional political and economic uncertainty.
The rapid expansion of road traffic is driving an explosion of demand for oil that is largely responsible for China’s transition to a net oil importer in 1994. This trend, coupled with increasing reliance on petroleum in the rail transport sector, is probably the most potentially troubling supply issue China faces in the transport sector.